The Truth About Bankruptcy and High Earners
For over 25 years, I represented debtors, filing over 4,000 Chapter 7 and Chapter 13 bankruptcy cases. Today, I help creditors recover what they are owed from Texas debtors. While my focus has shifted, one truth remains clear: bankruptcy is not limited to any income level.
Think You Make Too Much to File Bankruptcy? Think Again.
Many people believe that earning a high income disqualifies them from bankruptcy protection. That’s simply not true. Some of the wealthiest individuals and high-profile names have filed for bankruptcy to reorganize their finances or manage debt.
Here’s a short list of well-known figures who have filed bankruptcy:
- Cyndi Lauper
- Willie Nelson
- Toni Braxton
- Walt Disney
- Mike Tyson
- Tom Petty
- Donald Trump
- Henry Ford
Bankruptcy is not about income alone; it’s about managing overwhelming debt and finding a path to financial stability.
Myth: “You Can’t File Bankruptcy if You Make Good Money.”
Truth: The U.S. Bankruptcy Code does not exclude individuals based solely on income. While eligibility for Chapter 7 or Chapter 13 bankruptcy depends on specific criteria, income alone is not a barrier.
Here’s how it works:
- Chapter 7 Bankruptcy: You must pass a means test, which considers your income, expenses, and debt. This test ensures Chapter 7 is reserved for those who truly cannot pay their debts.
- Chapter 13 Bankruptcy: This option is available to those with regular income. Instead of discharging debts outright, Chapter 13 allows debtors to reorganize and pay back creditors over time.
Even high earners may qualify for Chapter 13 bankruptcy, which offers protection from creditors and a structured repayment plan.
Why Bankruptcy Might Still Be the Right Choice
- Protection from Creditors: Filing for bankruptcy can stop harassing calls, wage garnishments, and lawsuits.
- Financial Reset: Bankruptcy offers a chance to reorganize debts and focus on financial recovery.
- Tailored Solutions: Whether through debt discharge (Chapter 7) or a repayment plan (Chapter 13), bankruptcy provides relief suited to your circumstances.
For Creditors: Protecting What’s Owed
As a creditor-focused attorney, I now help ensure creditors recover what they’re due. Understanding the intricacies of bankruptcy law from the debtor’s perspective allows me to offer strategic insights to creditors, ensuring fair outcomes while complying with the law.
